Fifty years in Wall Street
ostentation with which they carry it on. There are no gallery plays,
there are no scare heads in the newspapers, there is no wild scramble or
excitement. With them the process is gradual, thorough, and steady, with
never a waver or break. How much money this group of men have made it is
impossible even to estimate. That it is a sum beside which the gain of
the most daring speculator of the past was a mere bagatelle is putting
the case mildly. And there is an utter absence of chance that is
terrible to contemplate. This combination controls Wall Street almost
absolutely. Many of the strongest financial institutions are at their
service in supplying accommodations when needed. With such power and
facilities it is easily conceivable that these men must make enormous
sums on either side of the market. So far, fortunately, their
manipulations have all been one way—upward; and in conjunction with the
general prosperity this has resulted in making large sums of money for
nearly everybody in the Street.
Here and there we have heard of losses, some of them fairly large, but
in comparison with the general money-making these are hardly to be taken
into consideration.
The last preceding boom that Wall Street had enjoyed was as different
from this as it is possible to imagine. It had all the elements which
this one had not. It centered about one man who stood out in the lime
light clear and distinct. It kept the Stock Exchange in a constant state
of ferment. It filled the newspapers with column upon column of
sensational stories. It made millions for an army of retainers, on
paper, and it kept the market jerking up and down for months.
Roswell P. Flower, ex-Governor of the State of New York, was the leader
of the boom, and a more picturesque figure had never been seen in Wall
Street, which is saying a great deal. Mr. Flower was an individual of a
very plain exterior. He often used language that was noticeable more for
its force, directness, and emphasis than it was for polish. He was
rarely seen without a huge quid of tobacco that almost filled the left
side of his mouth. Spittoons were an essential part of the furnishings
of his office. His clothing hung on his person not unlike meal sacks.
His hat was rarely brushed, and for days at a time, apparently, he
forgot to shave. Altogether he was the last person, in appearance, who
would be expected to lead in a district that is famous for its
well-groomed men. His education was certainly not collegiate. All these
factors the ordinary man would have judged to be handicaps, yet they
were Mr. Flower’s strongest aids. The lack of artificial polish gave
people confidence in his statements. His limited education enabled him
to think clearly along certain lines without being hampered by mental
digressions, which would probably have come with a higher mental
culture.
As the administrator and manager of the estate of his brother-in-law,
Henry Keep, he came into the Street about twenty-five years ago. He
controlled a large amount of funds, which by conservative direction he
increased very substantially. He scarcely ever figured in the
speculative field to any great extent until after he had completed his
term as Governor of New York State. When he returned to the Street from
Albany he naturally came with a considerable prestige. Ex-Governors of
the Empire State are not very plentiful in and about the Stock Exchange.
He also brought with him a large political following. In both of the
great parties in New York State there are many men of standing and
influence who like to take a flyer in Wall Street. Almost to a man they
associated themselves with Mr. Flower, who, during his term at the
capital, had made hosts of friends with Republicans and Democrats alike.
He also had close associations with most of the big capitalists.
After he had settled down to business, on leaving politics behind, Mr.
Flower picked out several stocks as his specialties. Under his
manipulation all these properties went up and soon began to show a big
advance, unusual strength, and great activity. The bears made frequent
assaults on his position and now and then pushed him toward the wall,
but he always fought his way to the front again, and came out master in
every encounter. When he had himself pretty well intrenched in the
specialties he was handling, he suddenly plunged into Brooklyn Rapid
Transit, and for months he kept things stirred up in a way that even
Wall Street has seldom seen. He picked up the stock commencing at 6 and
in an incredibly short time ran it up to over 138. Almost every
politician in the State made a fortune on paper. Mr. Flower was
immensely popular with the Wall Street news reporters, who helped his
boom along through the glowing accounts they wrote from day to day.
Under the impetus of the swirl in Rapid Transit, practically every
property in the Street went flying upward, until the end did not seem to
be in sight. The bears were beaten to a standstill every time they
showed their heads. The only result of their attacks was that Flower
stocks would jump up a notch higher. The ex-Governor preached
Americanism and confidence, until everybody believed that if a stock
were only grounded, and the property located in America, you could buy
it at any price and still be on the safe side.
That a terrible panic did not grow out of this boom was due only to one
fact: Mr. Flower’s sudden death. Had he lived thirty days longer the
bubble must have been pricked, and the result would have been
disastrous. Mr. Flower went to the country for a day’s rest, ate freely
of ham and radishes, and washed his frugal meal down with a copious
supply of ice water. He died, a few hours afterwards, of an attack of
acute indigestion. His death alone saved the Street.
The Rockefellers, the Vanderbilts, and his other wealthy friends rushed
into the market with millions and sustained values. They were in a
position to attribute the threatened reaction to his death, and pointed
out the absurdity of letting such an incident affect the value of
stocks. They discounted the break that must have come, in the natural
course of events, under the forcing process that was going on. Reasoning
such as this, spread broadcast through the papers, stopped the break.
Where the bottom would have fallen out entirely there was virtually but
a moderate break all along the line. The small speculators, operating on
moderate margins, were of course wiped out almost to a man; but most of
the big fellows were saved. It is probably the only instance on record
where the death of a big operator saved a general smash. Those hurt were
numerous politicians and small-fry operators who, instead of getting
away with snug fortunes in the shape of profits, lost everything.
An interesting incident of the Flower boom was the way it was
involuntarily helped along by young Joe Leiter. Leiter himself, although
he had gone to the wall some time previously, had indirectly brought
about certain conditions that served Mr. Flower’s purpose admirably.
These conditions were the general release of hundreds of millions of
dollars on mortgages on farm lands. When Leiter began to corner wheat it
was ruling down in the neighborhood of sixty cents a bushel. He lifted
it to considerably over a dollar before he went broke. This enabled
thousands of farmers to realize on their crops at the dollar figure and
above, which brought prosperity almost overnight to the wheat-growing
belt. With the money realized from their wheat they paid off their
mortgages to the extent of two or three hundred million dollars. These
mortgages were generally held in the East. This released that much
Eastern capital, causing a vast volume of money to seek investment. The
men controlling this money were overjoyed when Mr. Flower made an
opening for them through the Wall Street boom, and hence it was
comparatively easy, for a time, to push up values.
Mr. J. Pierpont Morgan, now a noted character in the Street, was trained
as a clerk in the one-time famous banking house of Duncan, Sherman & Co.
Later he made a connection with Anthony J. Drexel, probably the
wealthiest banker of his time in America. Out of this connection grew
the house of Drexel, Morgan & Co., with Mr. Morgan as the managing
partner in New York. When Mr. Drexel died, Mr. Morgan absorbed the
entire business, and a few years later, when his father died, he became
the head of the London house of J. S. Morgan & Co. as well.
This put him in a very prominent position. He soon thereafter
demonstrated his influence by reorganizing the bankrupt Richmond and
West Point Terminal Railway and Warehouse Company, changing its name to
the Southern Railway Company. A number of small roads were added to it,
many of which were in financial straits and practically all of which had
been badly managed. He combined them into one system under one head. Mr.
Morgan next turned his attention to the reorganization of the Reading
and the Erie roads, which were in a bad way. He soon produced order out
of chaos there, and that resulted in a boom in railroad stocks all along
the line. He had several sharp tussles, however, with some of the big
stockholders, who tried to stand out against him because they thought
his plans too drastic.
The people who followed Mr. Morgan’s lead in these transactions
generally made money.
A different sort of deal was engineered a few years before by Mr. S. V.
White, popularly known as Deacon White, because of his position as a
deacon in Plymouth Church. Mr. White is one of the oldest operators in
the Street, and one of its most striking figures. He has made half a
dozen great fortunes in speculation and lost them, but he is as
undaunted as ever, and in spite of the fact that he is now over seventy
years old he is still active daily in the market.
Probably one of the most unique stock deals ever carried out in the
Street resulted from the transaction of Joseph Bannigan when President
of the Rubber Trust. The history of this deal, which for a time resulted
in a great boom in industrials, has never been told, and is known to but
very few persons, most of whom, by the way, were its victims.
Bannigan was an uneducated Irishman. He began life in a New England
rubber factory and conscientiously worked his way up from a wage of
$1.50 a day to die worth $5,000,000. He was shrewd and bright and knew
the value of money. He saved to such good purpose that when the Rubber
Trust was formed he was at the head of one of the biggest factories in
the country, located in Providence. His knowledge of the trade was so
thorough that, despite the fact that he almost invariably used small
“i’s” in writing a letter, he was made president of the trust, his
holdings amounting to about 40,000 shares. When matters had been moving
along for some time, Bannigan made up his mind that the other men in the
trust, the big fellows, were not treating him right, and that the best
thing he could do was to get out. So he packed his stock certificates in
a gripsack, left Providence on the night boat, landed in New York bright
and early, had his breakfast, and then made a bee line for a
stockbroker’s office. He had assured himself in advance that this
stockbroker was to be relied upon, and so he told him frankly what he
intended to do.
“I want to sell out, bag and baggage,” he said. “I want to get rid of
every one of my 40,000 shares. Here they are; put them on the market and
sell them.” The stockbroker told him that that would never do. If he
wanted to realize full value for his holdings he would have to go about
it in a different way, for if he should throw his 40,000 shares into the
market it would knock the bottom out of prices, and he would get little
or nothing for his stock. Mr. Bannigan saw the point and asked what he